TORONTO: The Canadian dollar was little changed against its US counterpart on Tuesday as the currency consolidated after last week's volatility, while soft economic data also kept investor sentiment subdued.
For the fifth straight day, the Canadian dollar finished within a tight 11-point range between C$1.2059 and C$1.2070 after weakening some 1.2 percent early last week in reaction to plummeting commodity prices.
"Things have calmed down ... It looks like we're in for a period of consolidation," said John Curran, senior vice president at CanadianForex.
Canadian retail sales for February rose a greater-than-expected 0.8 percent from January, but in volume terms, which is a more important GDP measure, sales were flat.
"At the end of the day, we're still going to focus on Canadian fundamentals. The numbers today were okay. Going longer term, I believe the slowdown in Canada will occur and we will see the Canadian dollar weaken off," Curran added.
Canada's dollar finished the North American session at C$1.0262 versus the US dollar, or 97.45 US cents, little changed from Monday's North American finish at C$1.0261, 97.46 US cents.
The Canadian dollar was mostly outperforming other major currencies. It touched its strongest level against the Australian dollar in more than a month.
A reasonable degree of top side interest was likely containing the currency from pushing through C$1.03, said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London. He added that the Canadian dollar could test the C$1.0295 level in the near term.
"It's remarkably tightly ranged in the short term. It does feel that we have a cautious top side bias," said Stretch.
"You could partly attribute that to the backwash from the Chinese PMI data ... There's certainly a bias toward slightly more risk aversion earlier in the session in the wake of the German manufacturing PMI numbers."
German PMI data showed a sharp drop in the country's business activity, fanning concerns about the euro zone economy, while growth in China's vast factory sector also dipped in April as new export orders shrank, suggesting China still faces formidable global headwinds in the second quarter.
US factory activity expanded at its slowest pace in six months in April, the latest signal that economic growth was losing momentum in the second quarter.
US data released for the remainder of this week, including gross domestic product figures on Friday, will be the focal point for the currency.
Canadian government bond prices were lower across the curve, with the two-year bond off less than half a Canadian cent with a yield of 0.947 percent, while the benchmark 10-year bond was down 13 Canadian cents to yield 1.725 percent.
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